Market Insights: Tuesday, July 8th, 2025

Market Overview

Stocks finished mixed Tuesday as investors digested another wave of aggressive tariff rhetoric from President Trump, who reaffirmed his commitment to imposing stiff trade penalties starting August 1. Trump stated flatly that no further extensions would be granted beyond that date, warning that countries should prepare to start paying tariffs under his broad "reciprocal" tariff plan. Markets initially held up but drifted as the day wore on. The Dow slipped about 0.4%, while the S&P 500 ended just slightly below the flatline. The Nasdaq eked out a modest gain, rising just under 0.1% in a relatively muted session.

Adding to the tension, Trump announced that copper imports will be hit with a 50% tariff and hinted at possible 200% duties on pharmaceutical products. This triggered a sharp spike in copper futures, which jumped over 10% intraday. Meanwhile, major pharmaceutical stocks, including Pfizer, Amgen, and AbbVie, gave up earlier gains as investors braced for the next round of policy announcements. Amazon shares also edged lower by just over 1% as the company's expanded Prime Day event launched amid concerns that tariffs could inflate consumer prices. With a quiet economic calendar ahead of the FOMC minutes release on Wednesday, all eyes remain on Washington as trade developments continue to set the tone for markets.

SPY Performance

SPY slipped slightly on Tuesday, closing down 0.05% at $620.34. After opening at $621.35, the ETF traded in a narrow range, with a high of $622.11 and a low of $619.52. Volume was average at 57.28 million shares. Despite early strength, SPY failed to gain traction and ended modestly in the red for a second consecutive session. The market continues to show signs of consolidation, holding above key support zones but struggling to recapture recent highs as traders remain on edge over geopolitical and fiscal developments.

Major Indices Performance

The Russell 2000 led Tuesday’s gains, rising 0.71% as small caps staged a rebound following Monday’s sharp decline. The Nasdaq inched up 0.07%, narrowly breaking into the green after hovering near flat most of the session. In contrast, the Dow fell 0.37%, weighed down by weakness in healthcare and industrial names reacting to tariff risks. The S&P 500 slipped just below unchanged, marking a second straight day of subdued performance. Sector action was mixed, with risk-sensitive groups bouncing slightly while defensive names like healthcare underperformed amid policy threats.

Notable Stock Movements

The Magnificent Seven delivered a mixed session, with leadership split between modest gains and light losses. Amazon fell just over 1% as its Prime Day kickoff drew scrutiny over pricing and tariff pressures. Alphabet, Microsoft, and Netflix also ended in the red, while Apple, Nvidia, Tesla, and Meta managed slight gains. No clear leadership emerged, reflecting broader market indecision as investors remained cautious around policy-driven volatility. Stock-specific headlines drove moves, but the lack of conviction suggested traders are waiting for more clarity from Washington and upcoming earnings.

Commodity and Cryptocurrency Updates

Crude oil rose 0.54% to settle at $68.30, marking a slight recovery despite broader macro uncertainty. While price action was tame, our model maintains its outlook for a gradual move toward $60 later this year. Gold sold off sharply, falling 0.92% to $3,311 as stronger yields weighed on safe haven demand. Meanwhile, Bitcoin climbed 0.77% to close above $108,700, continuing its recent consolidation around key long-term support zones. Despite modest volatility, crypto remains resilient amid broader risk rotation.

Treasury Yield Information

The 10-year Treasury yield edged higher by 0.07% to close at 4.398%, continuing its steady march toward the critical 4.5% level. Rising yields remain a headwind for equities, particularly if they accelerate and threaten valuations. For now, yields are not flashing major warning signs, but traders should remain watchful—especially with 4.8% and 5% identified as key danger zones that could trigger larger equity corrections. As yields grind higher, the risk to risk assets increases proportionally.

Previous Day’s Forecast Analysis

Monday’s forecast projected SPY to trade between $614 and $625.50 with a neutral to slightly bearish bias. Resistance was identified near $623, with support expected at $618, $615, and $610. The model favored short trades on failed rallies below resistance and long entries near support if price action stabilized. The forecast acknowledged the potential for headline-driven reversals, especially given lingering macro tensions. It emphasized a cautious, flexible approach with a focus on confirmation before entering trades due to expected volatility around key levels.

Market Performance vs. Forecast

Tuesday’s action tracked the prior day’s forecast closely. SPY opened at $621.35 and stayed within the projected range, reaching an intraday high of $622.11 before pulling back to a session low of $619.52 and closing at $620.34. The move respected the upper resistance near $623 and found support near $619 as forecasted. With no major macro catalyst emerging, the day unfolded as expected, choppy and indecisive, giving traders opportunities to fade moves around the edges of the range. Support held firm, and those who positioned long near $619 likely captured modest gains into the close.

Premarket Analysis Summary

In Tuesday’s premarket analysis posted at 7:40 AM, SPY was trading at $621.75 with a bias level anchored at $621. The analysis called for a lack of directional conviction and anticipated choppy trading centered around the middle of the range. The model outlined targets above at $624.25, $625, and $630 and below at $621, $619, $616, and $610. Analysts noted the likelihood of clustering around the $621 level and projected a high probability of rangebound consolidation barring a major news development. The preferred strategy was to fade extremes at the edges of the expected zone.

Validation of the Analysis

Tuesday’s session validated the premarket analysis effectively. SPY hovered near the $621 clustering level throughout most of the session, briefly probing downside support near $619 before bouncing modestly. There was no sustained directional momentum, as predicted, and price never threatened to break out past upper resistance or below key support. Traders who faded moves near $619 and scaled out near $621 found setups that aligned perfectly with the roadmap. The restrained price action confirmed that without a catalyst, the market was likely to churn sideways within the defined range.

Looking Ahead

Wednesday’s focus turns to the FOMC minutes from the June meeting, set to be released in the afternoon. With no other data on tap, traders will be parsing the Fed’s language for insights into future policy direction, particularly any hints around inflation expectations and rate cuts. Markets are likely to remain cautious leading into the release, with potential for a sharp reaction if the minutes reveal a more hawkish or dovish tilt than anticipated. The document could reset expectations and drive volatility into the latter half of the week.

Market Sentiment and Key Levels

SPY ended Tuesday at $620.34 and continues to trade just above a critical support zone between $618 and $615. The overall market sentiment remains cautiously bullish, supported by the uptrend holding above $600, but fading momentum suggests growing hesitancy. Resistance levels are now stacked at $623, $625, and $627, with a strong cap expected near $630. Support comes in at $618, followed by $615, $612, and $610. A push above $625 could open the door for a run toward $630, but bears will look to exploit any weakness below $618. With tariff risks looming, traders should be prepared for fast moves if new headlines hit.

Expected Price Action

Our AI model projects SPY to trade between $618 and $625 on Wednesday, a slightly wider range than Tuesday’s. This reflects an expected increase in volatility tied to the release of the FOMC minutes. The market bias remains neutral to slightly bullish, with long setups favored on clean holds above $618 and resistance likely capping rallies near $625 and $627. If SPY breaks above $627, we could see a fast push to $630. On the downside, failure to hold $618 would likely bring $615 and $610 back into focus. This is actionable intelligence, and traders should prepare for sharp price swings in response to any surprises in the Fed’s tone.

Trading Strategy

Wednesday’s session should be approached with increased caution. Long trades are favored on confirmed bounces near $618 or $615, targeting moves toward $625 and $627. However, wait for signs of stabilization and volume before entering. If SPY pushes above $625, consider trailing stops into $627 or $630. On the short side, rallies that stall near $625 or $627 may provide good entry opportunities, especially ahead of the FOMC minutes. Use tight stops on shorts, and be ready to reverse if upside momentum builds. The VIX dropped to 16.81, signaling lower near-term volatility, but headline risk remains high. Position sizing should remain conservative.

Model’s Projected Range

The model projects SPY’s maximum range for Wednesday between $616 and $627.50 with the Call side dominating within a narrow range, suggesting choppy price action interspersed with occasional trending moves. Today’s session reflected persistent concerns over potential tariffs following recent White House remarks on new trade measures. SPY logged its second consecutive minor red day, an uncommon occurrence of late, closing down 5 basis points at $620.34 on average volume. The market gapped slightly higher overnight but remained confined to a narrow $3 range with limited price action. Despite tariff uncertainty, the broader uptrend stays intact as long as SPY holds above $585. Heading into Wednesday, bulls will look to defend the $618 level to support another leg higher; a break below that could lead to a pullback toward $615, with $610 in play. SPY remains tightly coiled, awaiting a catalyst to break either direction. Meaningful downside appears unlikely unless SPY breaches $600, which could quickly trigger a drop to $585. While our model does not currently assign high probability to that outcome, traders should remain flexible in case tariff developments destabilize sentiment. In the absence of a major catalyst, we anticipate dips toward $618 will be bought, with a gradual grind higher expected. A failure at $618 opens the path to $615, and we remain inclined to buy all the way down to $600; below that, we shift to a bearish stance targeting $585. Resistance levels are noted at $623, $625, $627, and $630, while support lies at $618, $615, $612, and $610. SPY is straddling the lower edge of the redrawn bull channel from the April lows, with heavy resistance between $625 and $630 potentially capping further gains. A break below $610 could signal more material downside risk. Broadly, the market remains highly sensitive to macroeconomic indicators, bond yields, inflation data, tariffs, and fiscal policy. Meanwhile, the VIX dropped 5.51% to 16.81, suggesting a risk-on tone, though caution is still advised. At these levels, considering out-of-the-money calls with 90-day expirations may be prudent, as traders prepare for possible volatility ahead.

Market State Indicator (MSI) Forecast

Current Market State Overview:
The MSI is currently in a narrow Ranging Market State, with SPY closing at the upper end of the range. There were no extended targets printing for the bulk of the day. The MSI rescaled higher overnight but remained in a narrow bullish state without extended targets implying the herd was not participating in any relief rally. As such SPY traded sideways for the entire market session, flipping from a narrow bullish state to a narrow ranging state. This implies a market waiting for a catalyst or some trigger to breakout. Currently MSI support stands at $618.88 with resistance at $620.87.
Key Levels and Market Movements:
On Monday, we noted: “In the absence of a macro catalyst, the market is likely to retest today’s lows at $618, where bulls are expected to step in once again,” and added, “a retest of today’s lows seems likely, but the overall trend remains intact,” while favoring long setups above $615 and watching for short opportunities above $620 or on failed breakouts. Armed with that roadmap, and with SPY opening above $621 in the middle of a narrow, bullish MSI, we held off until price or the MSI offered a clear setup. The market churned sideways, and MSI eventually shifted to a ranging state, not ideal trading conditions. Still, with $618 tested and holding overnight, we were hunting for long entries near that level. That opportunity came on a triple bottom just before noon, where we went long at $620 with a first target at MSI resistance at $621.85. The move played out, and we eyed the premarket level of $624 as a final target, but momentum faded. With the move stalling and only a one extended target, we exited the long at $621.85 and reversed short, targeting $620.85 just enough to meet our $1 minimum on SPY. That level hit quickly, and after a brief pop, we moved our stop to breakeven and aimed for a second target at MSI support at $619. However, the market stalled again, and we exited flat at the close around $620.35. In a session where doing nothing might have been best, we’re satisfied with two modest wins, made possible by following a disciplined daily plan, using MSI for directional clarity and timing, and integrating its levels into our broader model. MSI continues to be a cornerstone of our consistent trading process.
Trading Strategy Based on MSI:
Wednesday brings the release of FOMC minutes, which may offer some insight into the Fed’s recent discussions, though we don’t expect much impact from them. Instead, the market’s focus remains on tariff developments and the upcoming earnings season, with banks and Netflix kicking things off next week ushering in more favorable trading conditions. For now, tariff-related uncertainty dominates, and with August 1st now seen as the drop-dead date for negotiations, July may bring a deeper pullback if this overhang persists. The recent parabolic rally has paused, and caution is warranted. In the absence of a macro catalyst, we expect continued range-bound action as the market builds energy for a potential breakout. If bulls can hold $620, a push to $625 is possible Wednesday; otherwise, SPY may again test $618, where buyers are expected to step in. However, repeated tests weaken support, and a clean break below $618 could send SPY to $615 quickly. A decisive break below $615 would increase the odds of a drop to $600, at which point we would shift exclusively to short setups. Until then, we expect buyers to continue supporting dips, barring unexpected negative headlines from the White House. If key levels hold, the market could resume its grind higher toward $635. Currently, MSI remains in a narrow ranging state, awaiting a catalyst, but the overall trend is intact, with bulls likely to treat any pullback as a liquidity opportunity. Volume was average, suggesting the market is stuck in a tight range, still favoring buyers. For bears to gain traction, a break below $600 would be necessary, while a close above $625 would strengthen the case for a move toward $630 and new highs. We continue to favor long setups above $615, while short opportunities may arise above $622 or on failed breakouts or breakdowns below $615, especially when MSI signals weakening conditions. As always, failed moves remain among the highest-probability setups. Stay nimble, avoid trades during Ranging Market States, and ensure full alignment with MSI. Providing real-time insights into market control, momentum shifts, and actionable levels, the MSI when integrated with our Pre-Market and Post-Market Reports continues to sharpen execution precision and elevate trade quality. If you haven’t yet integrated MSI and our model levels into your process, now is the time. Contact your representative to get started as these tools are designed to support consistency and enhance performance.

Dealer Positioning Analysis

Summary of Current Dealer Positioning:
Dealers are selling SPY $621 to $640 and higher strike Calls while also selling $618 to $620 Puts in small size, indicating the Dealers belief that prices will not fall below $618 on Wednesday and are more likely to rally toward $625. This level appears to be the ceiling for Wednesday. Dealers only sell close to the money Puts when they are confident prices will rise. That said they are selling very small quantities so do not outweigh this information. To the downside, Dealers are buying $617 to $575 and lower strike Puts in a 2:1 ratio to the Calls/Puts they’re selling implying little concern that prices will continue to move lower tomorrow. Dealer positioning is unchanged from neutral to neutral.   
Looking Ahead to Friday:
Dealers are selling SPY $623 to $640 and higher strike Calls while also buying $621 to $622 Calls implying the Dealers desire to participate in any rally which may develop by week’s end. The likely ceiling for the week is $625. To the downside, Dealers are buying $620 to $555 and lower strike Puts in a 3:1 ratio to the Calls they’re selling/buying, reflecting a slightly bearish outlook for the week. Dealer positioning is unchanged from slightly bearish to slightly bearish. We advise reviewing Dealer positioning daily for directional clues. These positions evolve quickly and tracking them is essential for staying ahead of shifting market sentiment.

Recommendation for Traders

With SPY continuing to hover near key support at $618, traders should stay cautious and avoid aggressive entries without confirmation. Long trades near $618 to $620 offer solid setups if price action shows signs of basing, with upside targets at $623 and $625. If SPY breaks above $625, aim for $627 or even $630. On the short side, failed rallies near $622 or $625 could present opportunities, especially ahead of the FOMC minutes. Risk management is critical. Keep stops tight and reduce position sizes in anticipation of heightened volatility. VIX at 16.81 still points to moderate risk-on sentiment, but rapid reversals remain possible. As always, review the premarket analysis posted before 9 AM ET to account for any changes in the model’s outlook and in Dealer Positioning.

Good luck and good trading!